(TNND) — Small business optimism is heading into the final chapter of 2025 on a small upswing, though inflation pressures are rising once again.
The National Federation of Independent Business released the November update to its Small Business Optimism Index, which registered a 99.
That’s less than a point increase from the previous month, though the majority of index components improved.
And close to two-thirds of businesses rated their business health as good or excellent.
“They’re kind of optimistic about the general conditions, even though there are these significant challenges for some,” NFIB Executive Director of Research Holly Wade said.
The current reading, 99, is below the reading a year ago, 101.7, but higher than the three Novembers before that.
And it’s just above the long-term average of 98.
The NFIB’s optimism index is based on surveys from small companies across a broad scope of industries.
The optimism index hit a post-election high of 105.1 last December, with small business owners anticipating a more friendly regulatory and policy environment.
The index sank to 95.8 in April, as President Donald Trump rolled out his reciprocal tariffs, before rebounding a bit over the summer and then settling into the high-90s range in the fall.
RAISING PRICES
More small business owners raised their prices in November.
A net 34% of owners, seasonally adjusted, raised their average selling price.
That was a 13-point jump from October and a record month-over-month increase.
Price increases remain more common than the long-term norm, Wade said.
Inflation was the second-most cited problem for small business owners, trailing labor quality.
But the gap shrank last month, with more businesses citing inflation and fewer citing labor quality.
Wade said the NFIB doesn’t know how much small businesses are hiking prices, just that more are doing so.
“The inflation story has kind of reemerged in this last report as a significant problem for small business owners,” Wade said. “Yeah, this has been a story for many years, but it’s still in the forefront for those business owners who are still struggling to absorb those higher costs.”
Tariffs are a factor in the inflationary pressure, Wade said
Small businesses are trying to hold the line on prices, trying to diffuse the increases throughout their business operations.
Wade said small businesses are worried about competing on price while maintaining a profit.
“That’s the balance that small business owners have to deal with every day,” she said.
A month earlier, Wade flagged potential concerns over deteriorating earnings.
But she said Tuesday that a downward trend hasn’t materialized, which is a good sign for the small business economy.
LABOR & OTHER FACTORS
The labor struggles are fairly industry-specific, with construction leading the way.
Gas prices have dipped recently to under $3 a gallon nationally.
That’s a bit of good news for small businesses, Wade said.
And she said small businesses reported that their financing rates declined in the last month.
Savings on gas and financing help soften the blow of higher costs elsewhere for small business owners, Wade said.
Expectations for better business conditions fell in November and have fallen by 32 points since January.
“This is their kind of bigger view, their 10,000-foot view of economic conditions,” Wade said.
A seasonally adjusted 13% of small business owners said it’s a good time to expand their operations, which the NFIB said would be a relatively weak reading in a growing economy.
